Tax relief for investments in the digital and green transition

The amendment of the Corporate Income Tax Act (the “ZDDPO-2“), which entered into force last November, introduces a new tax relief for investments in the digital and green transition, which aims to change the existing model, promotes progress, improvements and sustainable development.

The conditions for reducing the tax liability in the case of investments in the digital and green transition are set out in Article 55.c of ZDDPO-2, whereas the Rules on Exercising Tax Reliefs for Investing in the Digital and Green Transition (the “Rules“) further specify the types of eligible investments which qualify as investments in the digital and green transition and process to claim the tax relief.

Pursuant to ZDDPO-2, a taxpayer can claim a reduction of 40% of a tax base in case of investments in cloud computing, artificial intelligence and big data (digital transformation), environmentally friendly technologies, decarbonisation of the energy sector, cleaner, cheaper and healthier public and private transport, energy efficiency of buildings and other standards for the climate neutrality (green transition). As an example, the tax relief can be claimed for investments in the establishment and upgrade of cloud computing, investments in software development related to artificial intelligence, investments in prescribed types of windows, doors, facades and roofing that contribute to energy efficiency of buildings.

The form for applying for tax relief, annexed to the Rules, envisages the following costs which can be considered as investments eligible for the tax relief: (i) costs of purchasing equipment and services, (ii) labour costs, (iii) costs of purchasing equipment for research and development, materials and services, (iv) training costs, (v) costs of contracts with external experts and researchers working on research and development projects or programs, (vi) costs of contracts for the implementation of research and development activities concluded with research and development organizations and other persons registered for the performance of research and development activities, and (vii) costs of vehicle purchase.

A taxpayer cannot claim the tax relief for investments in the part which is financed by budges of self-governing local communities, the state or the EU budget, if such funds have the nature of a grant. Tax relief is also excluded by R&D and investment relief.

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